Tuesday, April 18, 2006

Taxman sees sense over biodiesel

A few weeks ago I mentioned biodiesel supplier Dominic Goodwin's problem with the taxman.

If you run your car on pure vegetable oil, a form of biodiesel, you should only pay road duty of 27.1 pence per litre, compared to 47.1 p/l for normal diesel.

Vegoil should be 20p cheaper than diesel.

HMRC was charging the full whack late last year, because they didn't know that a stringent quality standard exists for pure rapeseed oil as a diesel fuel.

Once Dominic had showed them the test results of his vegoil, based on german quality standard E-DIN 51605, the central oils policy team of HMRC understood that it was, actually, eligible for the lower duty rate.

>> The full story - and the true tax situation for vegoil.

Is rapeseed biodiesel ecologically beneficial?

However, whether vegoil actually is more environmentally sound than diesel is questionable.

It may depend on the crop and how intensively it is farmed - all pesticide and fertiliser is hydrocarbon based, and there are transportation and ther energy issues.

Rapeseed is a relatively expensive crop to grow, requiring frequent rotation and extensive use of expensive fossil-fuel fertilisers, with major environmental concerns.

It is estimated that the cost of producing biodiesel is twice that of conventional diesel. And just to meet the EU's 5.75 percent target, more than 9 percent of the EU’s agricultural area will be needed.

Wikipaedia lists some of biodiesel's environmental benefits.

The following article goes further by discussing a life cycle analysis of biodiesel.

The UK’s biodiesel industry group commissioned a study that found producing biodiesel from oilseed rape “strongly energy positive”, with an output/input energy ratio of 1.78 where straw was left in the field; where straw was burned as fuel and oilseed rape meal used as a fertilizer, the ratio was even better at 3.71.

But this report has been criticised. Critics say the figures were arrived at by a combination of dubious measures, such as inflating the yield of oilseed to 4.08 t/ha when UK’s 2004 average national yield was only 2.9 t/ha, assigning illegitimate energy credits to coproducts, leaving out legitimate energy embodied in buildings required for processing and in farming implements and machinery, and ignoring many external environmental costs. >> More.

The EC is supporting biofuels because it needs to support its farmers and meet Kyoto targets. But whether the energy balance figures behind vegoil's apparent benefits really add up will depend, it seems, on more detailed energy accounting.

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